Tips for Keeping Your Small Business Finances in Order

With any business, especially a small business, it’s essential to keep your finances in order. While it can be somewhat challenging, not having or developing the skills to take care of your business can lead to financial difficulty and failure. While it can feel like a chore to maintain good financial habits, they are necessary; this is why we’re talking about tips for keeping your small business finances in order.

 

Have A Budget

Having and following a budget is vital in both your personal and your business finances. Keeping track of your income and expenses while checking in with your budget helps you stay on track. A good budget lets you see where you can take from one area of revenue or expense to add to another if you need to, which allows you to make decisions quickly and efficiently.

 

Have Good Business Credit

If you have poor business credit, getting approval for the funds you need will be difficult. Sooner or later you may want a loan, to increase your insurance coverage, or to expand your business, but you will need good credit to take action. To ensure that you have good credit, keep your credit utilization below 30%, pay your debt as soon as possible, and if you need funding, only apply for what you can repay within a reasonable timeframe.

 

Pay Yourself

You might be your own boss, but one thing you have to remember is that you shouldn’t work for free. Since you are an integral part of the business, it’s crucial that you pay yourself the same way you pay everything else needed to perform daily operations.

 

Plan For Business Taxes

Just as you have to pay federal income taxes, so does your business. The method of how you pay those taxes and your tax rate depends on the structure of your business. One easy way to plan for taxes is to set aside a portion of your monthly income; you might even consider moving it to a separate tax account to prevent it from being allocated to other expenses. These payments are due on the 15th of January, April, June, and September, and a competent CPA can help you with your tax planning throughout the year.

 

Separate Your Business and Personal Finances

While it might be convenient at first to use your personal checking account and credit cards to cover business expenses and income, it leads to complications that you don’t want. For one, you need proper documentation to prove which expenses were related to your business, and that’s not easy to do if you use your personal bank account and business and personal transactions are all intermingled. There are business bank accounts out there that offer unlimited transactions and free checks; your business should have its own accounts for ease of use, accurate books, and efficient preparation for tax season.

 

Hire A Professional Bookkeeper

It’s natural to want to handle everything yourself, but there are times when it’s time to rely upon a professional. Not only can they handle the small-business accounting and the legal matters that go with it, but they save you time and money in the long run and leave you free to focus on running your business.

If you’re ready to have a professional bookkeeper on your side, then it’s time to contact Taurus CPAs. Our mission has remained consistent from day one, and we aim to provide exceptional service that you can trust. If you’re looking for a reliable, quality bookkeeper for your small business, reach out to us.